BHP launched a bid for Canada's Potash Corporation in August this year. But the Ontario Teachers Pension Plan, which controls a £60billion portfolio of investments, is thought to be planning a rival offer.

The pension fund is understood to be talking to Singapore's sovereign wealth fund Temasek about joining together to mount a challenge to BHP's offer.

Rivals: BHP launched a bid for Canada's Potash Corporation in August this year and now Ontario Teachers Pension Plan is thought to be planning an offer

They are thought to be looking at either buying Potash outright, or
taking a stake. If the consortium bought a stake in the firm at above
BHP's offer price, the mining giant would have to raise its bid or walk
away.

BHP made its $130-a-share (£81.40) offer direct to
shareholders after directors of Potash rejected an initial approach as
being 'wholly inadequate'.

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But Potash's shares have been trading at well above this price
since the bid was announced in August, closing at $145.80 a share on
Friday.

Shareholders at BHP are now said to be worried that the
group's chief executive Marius Kloppers could pay over the odds for the
group, which produces a fifth of the world's potassium fertiliser.

BHP is a market leader in the production of coal, copper and
iron ore, and it is betting that the need for agricultural fertiliser
ingredients will rise as demand booms in among developing nations for
more meat and plants.

The threat of a rival bid for Potash from Chinese firm
Sinochem appears to be fading. Meanwhile, Potash is also said to be
considering a break-up of the firm to scupper BHP's approach.

This could involve the possible sale of the group's nitrogen
and phosphorous assets, and the proceeds used to pay shareholders a
dividend of up to $70 (£43.84) a share.

Potash's bankers are also talking to other mining groups and
members of the Canpotex cartel, which controls the price of potash
outside of north America, about buying a blocking stake in the company.